WSJ Article on Coffee

[avsmusic1]

I saw this today in yesterdays paper and thought I would share it in case anyone was interested. Hopefully the full story comes up for those w/out a subscription. Essentially, it talks about expected decreases in crops for the 2012-13 season and that farmers are scaling back on their investment in their crops due to low prices. It's focused on the "Americas" but I would expect it's a concern in other areas too if coffee prices are suffering.

Enjoy!

http://online.wsj.com/article_email...AyMDMwMDEzNDAyWj.html?mod=wsj_share_email_bot

 

[StillShaving]

With oil headed down to $80/barrel and natural gas prices at a 20 year low I would have expected the farmer's input costs to be trending down so they could (reluctantly) absorb some price reductions. But this article "How Corn Is Feeding Fertilizer" notes how corn or ethanol production has kept the price artificially high. An example where subsidies don't make economic or environmental sense.

The article didn't mention any expectations about worldwide consumption, just that Brazil was going to have a bumper crop. But with predictions of economic slowdown around the globe, that must have been factored into the future prices. It would certainly be reasonable to expect less coffee consumption in Greece, Italy, Spain,... this fall and next year.

I hope the futures markets will rise for the farmers. It would be better if there was a more stratified marketplace for the selling of high quality vs low quality beans. There might be some differences there, but my limited view of things is that the better farms (higher quality coffees) are often not rewarded in the marketplace for their efforts.